Autos CEO warns of battery shortage as EV competition heats up

In 2021, Volvo Cars says it plans to become an “all-electric car company” by 2030, a move that requires it to have a stable and safe supply of batteries for its vehicles. mine.

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New CEO and president of Volvo Cars has predicted that battery supply shortages will become a pressing issue for his sector, telling CNBC that the company has made investments to help it gain a foothold in the market.

“We’ve recently made a significant sensible investment with Northvolt, letting us control our own battery supply as we continue to grow,” said Jim Rowan, who joined the business last month, told CNBC on Thursday “Squawk Box Europe”.

In March 2021, Volvo Cars said it plans to become a “all-electric car company” by 2030, a move that requires it to have a stable and safe supply of batteries for its vehicles.

“I think battery supply is going to be one of the scarce ones in the coming years,” said Rowan.

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“And that’s one of the reasons we’ve made that significant investment with Northvolt: So that we can control not only the supply, but we can actually start growing the manufacturing and chemical facilities.” learn their own batteries.”

This will allow Volvo Cars to “take full control of that electric propulsion in the future”, he said.

Gigafactory plan

In February, Volvo Cars and battery maker Northvolt said they would built a battery factory in Gothenburg, Sweden, with construction scheduled to begin in 2023. According to the companies, the facility is set to “have a potential annual cell production capacity of up to 50 gigawatt hours.”

They say this is equivalent to supplying enough batteries for about 500,000 cars a year. The companies’ plans to develop a gigafactory had been announced previously, although a specific location had not been confirmed at the time.

As the number of electric vehicles on our roads increases, battery delivery will become increasingly important – and competitive – in the automotive sector.

Talk to CNBC’s Annette Weisbach last year, Volkswagen CEO Herbert Diess emphasized how important battery production will be in the coming years, noting that challenges persist.

“Batteries are likely to be an ongoing constraint on electric vehicle growth over the next five to 10 years,” he said.

“Because the lead time is huge. We need a lot of energy and cell production… [There is a] Massive supply chains must be established within the coming years and that could lead to some limitations. “

More recently, this month, Elon Musk emphasized the importance of lithium, a key part of batteries used in electric vehicles. On April 8, Tesla CEO tweeted that the price of lithium has “raised to insane levels!”

“Tesla might actually have to get directly involved in large-scale mining and refining, unless costs improve,” Musk said. “The element itself is not lacking, as lithium is almost everywhere on Earth, but the rate of extraction/refining is very slow.”

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Volvo’s electrification plans put it in direct competition with established automakers like Volkswagen, GM and Ford, as well as Tesla. Just this week, Ford CEO Jim Farley said his business was up and running “challenge Tesla and all those who are about to become the leading electric vehicle manufacturer in the world.”

During the interview with CNBC, Volvo Cars’ Rowan was asked if he hoped Musk’s takeover of Twitter would prove to be a distraction from the Tesla CEO.

“I don’t know,” he replied. “I know one thing… I won’t be distracted by what we need to get done. And that is, quite simply, that we need to continue our journey towards electrification.”

Rowan spoke on the same day his business announced its first-quarter results for 2022.

Revenue rose 8% to 74.3 billion Swedish krona (about $7.56 billion). Earnings before interest and taxes came in at 6 billion krona, compared with 8.4 billion in the first quarter of 2021.

The company sold 148,295 vehicles in the first quarter, down 20% year-on-year.

As with many businesses, supply chain issues continue to have an impact on operations. “Semiconductor restrictions continue to improve gradually,” the company said.

“However, due to a temporary shortage of a particular semiconductor, production declined at the end of Q1. This shortfall is expected to continue into the second quarter.”

Going forward, the business said it was expecting “the supply chain to improve in the second half of the year.”

—Chloe Taylor contributed to this article.

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